Cumberland Pharmaceuticals Reports 2012 Annual Financial Results

Cumberland Pharmaceuticals Reports 2012 Annual Financial Results
- Net income increased nearly 100% in fourth quarter.
- New Caldolor® pilot study top-line results provide favorable comparison.
- International agreements now include Indonesia and India.
PR Newswire
NASHVILLE, Tenn., Feb. 28, 2013
NASHVILLE, Tenn., Feb. 28, 2013 /PRNewswire/ --Cumberland Pharmaceuticals
Inc. (NASDAQ: CPIX), a specialty pharmaceutical company focused on hospital
acute care and gastroenterology, today announced fourth quarter and annual
2012 financial results.
Net Revenue: For the three months ended December 31, 2012, net revenue was
$13.7 million, up from $13.0 million in the prior year period.
For the year ended December 31, 2012, net revenues were $48.9 million,
compared with $51.1 million for 2011.
Operating Expenses: Total operating expenses for the three months ended
December 31, 2012 were $10.4 million compared to $11.3 million the prior year
period. During the fourth quarter of 2012, operating expenses included $0.7
million of non-recurring expenses associated with the realignment of our sales
organization.
For the year ended December 31, 2012, total operating expenses were
approximately $40.0 million compared with $41.3 million for 2011.
Net Income: Net income attributable to common shareholders for the three
months ended December 31, 2012, was $1.8 million, or $0.09 per diluted share,
compared to $0.9 million, or $0.04 per diluted share, for the same period in
2011. This increase resulted from quarter- over-quarter sales growth along
with reduced expenses.
Net income attributable to common shareholders for the year ended December 31,
2012 increased to $5.8 million, or $0.30 per diluted share, compared to $5.7
million, or $0.28 per diluted share, for 2011. After excluding the one-time
sales realignment expenses, adjusted diluted earnings per share were $0.32. ^
(1)
Balance Sheet: As of December 31, 2012, Cumberland had $71.0 million in cash
and marketable securities, compared to $70.6 million at the end of 2011. Total
assets at December 31, 2012, were $98.6 million compared to $95.5 million in
2011. At December 31, 2012, Cumberland had total loans of $4.4 million, down
from $4.9 million at the end of 2011. Shareholders' equity increased to $85.7
million at the end of 2012 from $82.9 million for the prior period.
"We are pleased with the progress we made in 2012 as highlighted by our
financial results, as well as several product milestones, including the
expansion of our international presence, the completion of four Caldolor
studies, and the allowance of two new Acetadote patents," said A.J. Kazimi,
Chief Executive Officer of Cumberland Pharmaceuticals. "As we move into 2013,
we will continue to maximize our near term opportunities while laying the
foundation for the long term expansion, diversification and success of our
business."
Product Highlights
Acetadote^®
In November 2012, Cumberland received a Notice of Allowance from the United
States Patent and Trademark Office for a second patent relating to the new
formulation of Acetadote. The new patent will include claims regarding the use
of the 200 mg/ml Acetadote formulation to treat patients with acetaminophen
overdose and will expire in August 2025.
Cumberland also entered into a Settlement Agreement with Paddock Laboratories,
LLC and Perrigo Company in November to resolve the challenges and pending
litigation between the Company and each of Paddock and Perrigo involving the
Acetadote patent. Under the Settlement Agreement, Paddock and Perrigo admit
that the Acetadote patent is valid and enforceable and that any Paddock or
Perrigo generic Acetadote product (with or without EDTA) would infringe upon
the Acetadote patent. In addition, Paddock and Perrigo will not challenge the
validity, enforceability, ownership or patentability of the Acetadote patent
through its expiration currently scheduled for May 2026.
The Company has also entered into a License and Supply Agreement with Paddock
and Perrigo. Under the terms of the License and Supply Agreement, if a third
party receives final approval from the FDA for an ANDA to sell a generic
Acetadote product and such third party has made such generic version available
for purchase in commercial quantities in the United States, the Company will
supply Perrigo with an authorized generic version of the Company's Acetadote
product.
In January 2013, Perrigo announced initial distribution of Cumberland's
authorized generic acetylcysteine injection product.
Caldolor^®
Cumberland is pleased to announce new top-line results from a pilot clinical
study evaluating the safety and analgesic efficacy of Caldolor (ibuprofen)
Injection compared to ketorolac injection in treating pain following knee
arthroscopy procedures in adult patients.
Fifty-one patients were enrolled at The Ohio State Medical Center. Compared to
patients receiving ketorolac, patients receiving intravenous ibuprofen
experienced less postoperative pain prior to discharge. Patients receiving
Caldolor also needed fewer narcotics and were less likely to require narcotics
prior to discharge. This data supports the benefits of using Caldolor in a
pre-emptive model of multimodal analgesia.
These positive results follow the February release of two recent studies
affirming the safety and efficacy of Caldolor in treating pain and fever in
adult patients when administered over a shortened infusion time. Top-line
results from these two registry studies involved 450 patients who received
Caldolor at 34 leading medical centers throughout the United States.
The Company continued to expand the international market for Caldolor through
strategic partnerships. In December 2012, the application for regulatory
approval of Caldolor for fever in Australia by Cumberland's partner Phebra Pty
Ltd., was approved.
In January 2013, Cumberland entered into agreements with India's Sandor
Medicaids Pvt. Ltd. and Indonesia's PT. SOHO Industri Pharmasi (a SOHO Group
company) for the commercialization of Caldolor in those countries.
Company Update
In November 2012, Cumberland completed a realignment of its national sales
organization to more efficiently cover key targets in support of all three
marketed products, Caldolor, Acetadote and Kristalose, in the United States.
Conference Call and Webcast
A conference call and live Internet webcast will be held on Thursday, February
28, 2013 at 4:30 p.m. Eastern Time to discuss the Company's fourth quarter
2012 financial results. To participate in the call, please dial 877-303-1298
(for U.S. callers) or 253-237-1032 (for international callers). A rebroadcast
of the teleconference will be available for one week and can be accessed by
dialing 855-859-2056 (for U.S. callers) or 404-537-3406 (for international
callers). The Conference ID for the rebroadcast is 97366269. The live webcast
and rebroadcast can be accessed via Cumberland's website at
http://investor.shareholder.com/cpix/events.cfm.
About Cumberland Pharmaceuticals
Cumberland Pharmaceuticals Inc. is a specialty pharmaceutical company focused
on the acquisition, development and commercialization of branded prescription
products. The Company's primary target markets include hospital acute care and
gastroenterology. Cumberland's marketed products include Acetadote^®
(acetylcysteine) Injection for the treatment of acetaminophen poisoning,
Caldolor^® (ibuprofen) Injection, the first injectable treatment for pain and
fever approved in the United States, and Kristalose^® (lactulose) for Oral
Solution, a prescription laxative. Cumberland is dedicated to providing
innovative products that improve quality of care for patients. For more
information, please visit the Company's website at www.cumberlandpharma.com.
About Acetadote
Acetadote, administered intravenously within 8 to 10 hours after ingestion of
a potentially hepatotoxic quantity of acetaminophen, is indicated to prevent
or lessen hepatic injury. Used in the emergency department, Acetadote is
approved in the United States to treat overdose of acetaminophen, a common
ingredient in many over-the-counter medications. Acetadote is contraindicated
in patients with hypersensitivity or previous anaphylactoid reactions to
acetylcysteine or any components of the preparation. Serious anaphylactoid
reactions, including death in a patient with asthma, have been reported in
patients administered acetylcysteine intravenously. Acetadote should be used
with caution in patients with asthma or where there is a history of
bronchospasm. The total volume administered should be adjusted for patients
weighing less than 40 kg and for those requiring fluid restriction. To avoid
fluid overload, the volume of diluent should be reduced as needed. If volume
is not adjusted, fluid overload can occur, potentially resulting in
hyponatremia, seizure and death. For full prescribing information, visit
www.acetadote.com.
About Caldolor
Caldolor is indicated for the management of mild to moderate pain and
management of moderate to severe pain as an adjunct to opioid analgesics, as
well as the reduction of fever in adults. It was the first FDA-approved
intravenous therapy for fever. Caldolor is contraindicated in patients with
known hypersensitivity to ibuprofen or other NSAIDs, patients with asthma,
urticarial, or allergic type reactions after taking aspirin or other NSAIDs.
Caldolor is contraindicated for use during the peri-operative period in the
setting of coronary artery bypass graft (CABG) surgery. Caldolor should be
used with caution in patients with prior history of ulcer disease or GI
bleeding, in patients with fluid retention or heart failure, in the elderly,
those with renal impairment, heart failure, liver impairment, and those taking
diuretics or ACE inhibitors. Blood pressure should be monitored during
treatment with Caldolor. For full prescribing information, including boxed
warning, visit www.caldolor.com.
About Kristalose
Kristalose is indicated for the treatment of acute and chronic constipation.
It is a unique, proprietary, crystalline form of lactulose, with no
restrictions on length of therapy or patient age. Initial dosing may produce
flatulence and intestinal cramps, which are usually transient. Excessive
dosage can lead to diarrhea with potential complications such as loss of
fluids, hypokalemia and hypernatremia. Nausea and vomiting have been reported.
Use with caution in diabetics. Kristalose is contraindicated in patients who
require a low-galactose diet. Elderly, debilitated patients who receive
lactulose for more than six months should have serum electrolytes (potassium,
chloride, carbon dioxide) measured periodically. For full prescribing
information, visit www.kristalose.com.
Forward-Looking Statements
This press release contains forward-looking statements, which are subject to
certain risks and reflect Cumberland's current views on future events based on
what it believes are reasonable assumptions. No assurance can be given that
these events will occur. As with any business, all phases of Cumberland's
operations are subject to factors outside of its control, and any one or
combination of these factors could materially affect Cumberland's results of
operations. These factors include market conditions, competition, an inability
of manufacturers to produce Cumberland's products on a timely basis or failure
of manufacturers to comply with regulations applicable to pharmaceutical
manufacturers, maintaining an effective sales and marketing infrastructure and
other factors discussed in the Company's most recent Form 10-K and subsequent
10-Q's as filed with the SEC. There can be no assurance that results
anticipated by the Company will be realized or that they will have the
expected effects. Readers are cautioned not to place undue reliance on
forward-looking statements, which speak only as of the date hereof. The
Company does not undertake any obligation to publicly revise these statements
to reflect events after the date hereof.
CUMBERLAND PHARMACEUTICALS INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(unaudited)
December 31, 2012 and 2011
2012 2011
ASSETS
Current assets:
Cash and cash equivalents $ 54,349,381 $ 70,599,146
Marketable securities 16,686,136 —
Accounts receivable, net of allowances 6,017,201 7,082,890
Inventories 6,218,355 5,774,694
Prepaid and other current assets 1,671,091 1,627,455
Deferred tax assets 2,290,078 2,223,882
Total current assets 87,232,242 87,308,067
Property and equipment, net 1,188,914 1,119,339
Intangible assets, net 9,476,798 7,023,064
Deferred tax assets 50,411 —
Other assets 645,366 67,846
Total assets $ 98,593,731 $ 95,518,316
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable $ 2,790,554 $ 1,513,548
Accrued liabilities 5,264,806 5,086,400
Total current liabilities 8,055,360 6,599,948
Revolving line of credit 4,359,951 4,859,951
Deferred tax liability — 645,029
Other long-term liabilities 611,933 578,119
Total liabilities 13,027,244 12,683,047
Commitments and contingencies
Equity:
Shareholders' equity:
Common stock – no par value; 100,000,000 shares
authorized;
18,937,107 and 20,020,535 shares 67,197,167 70,272,155
issued and outstanding as of
December31, 2012 and 2011,
respectively
Retained earnings 18,499,154 12,656,662
Total shareholders' equity 85,696,321 82,928,817
Noncontrolling interests (129,834) (93,548)
Total equity 85,566,487 82,835,269
Total liabilities and equity $ 98,593,731 $ 95,518,316
CUMBERLAND PHARMACEUTICALS INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Income
(unaudited)
Three months ended Years ended
December 31,
December 31,
2012 2011 2012 2011
Revenues:
Net product $ 13,637,333 $ 12,782,848 $ 47,944,031 $ 50,893,794
revenue
Other revenue 59,033 248,982 907,206 248,982
Net revenues 13,696,366 13,031,830 48,851,237 51,142,776
Costs and
expenses:
Cost of products 2,172,762 1,951,200 5,046,179 5,362,554
sold
Selling and 4,942,425 4,686,486 20,329,493 20,940,060
marketing
Research and 441,215 1,758,326 5,095,172 5,028,072
development
General and 2,765,056 2,784,427 9,096,165 9,307,301
administrative
Amortization 121,915 140,122 466,126 655,302
Total costs and 10,443,373 11,320,561 40,033,135 41,293,289
expenses
Operating income 3,252,993 1,711,269 8,818,102 9,849,487
Interest income 48,791 63,099 304,865 210,727
Interest expense (15,616) (24,460) (71,985) (353,497)
Income before 3,286,168 1,749,908 9,050,982 9,706,717
income taxes
Income tax expense (1,492,213) (841,783) (3,244,776) (4,080,204)
Net income 1,793,955 908,125 5,806,206 5,626,513
Net loss at
subsidiary
attributable to 11,545 3,540 36,286 31,343
noncontrolling
interests
Net income
attributable to $ 1,805,500 $ 911,665 $ 5,842,492 $ 5,657,856
common
shareholders
Earnings per share
attributable to
common
shareholders:
Basic $ 0.09 $ 0.05 $ 0.30 $ 0.28
Diluted $ 0.09 $ 0.04 $ 0.30 $ 0.28
Weighted-average
shares
outstanding:
Basic 19,048,945 20,130,211 19,564,625 20,342,913
Diluted 19,245,047 20,318,176 19,787,537 20,572,132
CUMBERLAND PHARMACEUTICALS INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(unaudited)
Years ended December 31, 2012 and 2011
2012 2011
Cash flows from operating activities:
Net income $ 5,806,206 $ 5,626,513
Adjustments to reconcile net income to net cash
flows provided by operating activities:
Depreciation and amortization expense 901,649 1,040,407
Deferred tax expense (benefit) (829,846) 1,665,110
Share-based compensation 636,528 779,305
Excess tax benefit derived from exercise of (3,760,766) (2,355,345)
stock options
Noncash interest expense 24,075 137,487
Noncash investment gains (45,814) —
Net changes in assets and liabilities affecting
operating activities:
Accounts receivable 1,065,689 (1,937,396)
Inventory (443,661) 1,909,148
Prepaid, other current assets and other assets (648,941) (399,393)
Accounts payable and other accrued liabilities 4,373,276 2,296,535
Other long-term liabilities 56,787 (40,224)
Net cash provided by operating activities 7,135,182 8,722,147
Cash flows from investing activities:
Additions to property and equipment (464,893) (257,502)
Additions to intangibles (2,071,926) (180,269)
Proceeds from sale of marketable securities 5,220,480 —
Purchases of marketable securities (21,860,802) —
Net cash used in investing activities (19,177,141) (437,771)
Cash flows from financing activities:
Net borrowings (repayments) on line of credit (500,000) 3,034,000
Principal payments on note payable — (5,333,333)
Payments made in connection with repurchase of (8,086,594) (4,247,440)
common shares
Costs of financing for long-term debt and — (17,637)
credit facility
Proceeds from exercise of stock options 618,022 629,865
Excess tax benefit derived from exercise of 3,760,766 2,355,345
stock options
Net cash used in financing activities (4,207,806) (3,579,200)
Net increase (decrease) in cash and cash (16,249,765) 4,705,176
equivalents
Cash and cash equivalents, beginning of year 70,599,146 65,893,970
Cash and cash equivalents, end of year $ 54,349,381 $ 70,599,146
CUMBERLAND PHARMACEUTICALS INC. AND SUBSIDIARIES
Reconciliation of Net Income Attributable to Common Shareholders to Adjusted
Net Income
Attributable to Common Shareholders and Adjusted Earnings Per Share
Attributable to Common
Shareholders:
(unaudited)
Three months ended Years ended
December 31, December 31,
2012 2011 2012 2011
Net income attributable $ 1,805,500 $ 911,665 $ 5,842,492 $ 5,657,856
to common shareholders
Costs associated with
sales force 685,267 — 685,267 —
realignment**
Income tax effect of
sales force realignment (277,533) — (277,533) —
costs
Net costs of sales 407,734 — 407,734 —
force realignment
Adjusted net income
attributable to common $ 2,213,234 $ 911,665 $ 6,250,226 $ 5,657,856
shareholders
Adjusted earnings per
share attributable to
common shareholders:
Basic $ 0.12 $ 0.05 $ 0.32 $ 0.28
Diluted $ 0.12 $ 0.04 $ 0.32 $ 0.28
Weighted-average shares
outstanding:
Basic 19,048,945 20,130,211 19,564,625 20,342,913
Diluted 19,245,047 20,318,176 19,787,537 20,572,132
** On November 29, 2012, Cumberland Pharmaceuticals Inc. (the "Company")
implemented a realignment of its national sales organization to more
efficiently cover key targets in support of its three marketed products,
Caldolor, Acetadote and Kristalose . As a result of this realignment the
Company's sales personnel totaling 64 individuals, consolidated into 8
nationwide districts. The Company does not expect to have further changes to
its sales personnel as a result of the realignment. The costs associated with
the sales force realignment are one-time expenses recorded during the fourth
quarter ending December 31, 2012. As management believes these costs are
nonrecurring and important to understanding the Company's business operations,
it has presented these separately.
The Company provided the above adjusted financial performance measures, which
are considered "non-GAAP" financial measures under applicable Securities and
Exchange Commission rules and regulations. These non-GAAP financial measures
should be considered supplemental to and not a substitute for financial
information prepared in accordance with generally accepted accounting
principles. The definition of these non-GAAP measures may differ from
similarly titled measures used by others.
Management believes these non-GAAP financial performance measures are
important as they eliminate nonrecurring sales realignment costs. The Company
used these non-GAAP financial measures to facilitate management's internal
comparisons of the Company's operating results, as well as to reconcile to
guidance provided to investors. In addition, the use of non-GAAP financial
measures provides greater transparency to investors of supplemental
information used by management in its financial and operational
decision-making, including the evaluation of the Company's operating
performance. The Company defines these non-GAAP financial measures as
follows:
oAdjusted net income attributable to common shareholders: net income
attributable to common shareholders adjusted for the one-time expenses
associated with the sales force realignment during the fourth quarter
ending December 31, 2012, net of related income tax effect.
oAdjusted basic earnings per share: adjusted net income attributable to
common shareholders divided by basic weighted-average shares outstanding.
oAdjusted diluted earnings per share: adjusted net income attributable to
common shareholders divided by diluted weighted-average shares
outstanding.
SOURCE Cumberland Pharmaceuticals Inc.
Website: http://www.cumberlandpharma.com
Contact: Investor Contact, Elizabeth Davis, Corporate Relations,
+1-615-255-0068, edavis@cumberlandpharma.com; or Media Contact, Rebecca
Kirkham, Lovell Communications, +1-615-297-7766, rebecca@lovell.com